NEC Recommends ₦302 Per Litre Petrol Price By February

As part of the National Economic Council’s (NEC) suggestion in November 2021, the federal government may raise the price of Premium Motor Spirit (PMS), also known as gasoline, to N302 per litre in February 2022.

According to TheCable, this is part of the government’s intention to completely de-regulate PMS costs, removing monthly subsidy payments while also ensuring fair competition in the market.

In Nigeria, the price of gasoline is now between N162 and N165 per litre.

The NEC ad-hoc committee advising the Nigerian National Petroleum Corporation (NNPC) on the right pricing of PMS in Nigeria made the recommendations. Nasir El-Rufai, the governor of Kaduna state and the committee’s chairman, presented the report.

The committee was formed last year by the NEC, which is led by Vice-President Yemi Osinbajo, to investigate states’ declining revenues.

Godwin Obaseki, Kayode Fayemi, and David Umahi, governors of Edo, Ekiti, and Ebonyi states, respectively; Godwin Emefiele, governor of the Central Bank of Nigeria (CBN); Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC); and Zainab Ahmed, minister of finance, budget, and national planning; and Godwin Emefiele, governor of the Central Bank of Nigeria (CBN

The Nigeria Governors’ Forum (NGF) advocated N385 per litre in May 2021, but it was rejected by stakeholders, including the federal government.

The committee has since reconsidered and rejected the recommendation.

The committee proposed that PMS prices be fully deregulated by February 2022, rising the price by around N130/140 per litre, according to the new report.

It was also suggested that all stores should post PMS prices on a dedicated website and smartphone app at all times, and that price changes should be posted within 15 minutes of the change.

The committee also stated that by removing the petrol subsidy, the federal government will save N250 billion every month.

“At current rates, the PMS subsidy is reducing transfers into the federation by about NGN 250 billion per month, and could, if PMS subsidies are not eliminated, result in deductions of NGN 3 trillion in 2022,” the committee’s resolution reads in part.

“The large-scale time-limited (6-months) cash transfer proposed as a way of transferring the subsidy “directly to the people” would cost N600 billion but would by paving the way for the elimination of PMS subsidies, enable the federation to recover N3 trillion in revenues that would otherwise go to PMS subsidies.

“If PMS subsidies are eliminated by February 2022, N250 billion in deductions would have been incurred, but the remaining N195 billion in anticipated PMS subsidy deductions could be redirected towards FGN funding of the cash-transfer programme.”

The NEC committee also recommended a market-based pricing mechanism, as another option, that would ensure petrol price ceilings at least once a month.

Meanwhile, the federation account allocation committee (FAAC) will meet on Wednesday (today) for the monthly meeting to distribute revenues between federal, state, and local governments.

At the last FAAC meeting, NNPC had said it would deduct some funds as value shortfall incurred due to differentials between the current PMS retail
price and actual open market price in January 2022.

Most states are presently experiencing fiscal stress and kicking against deductions of the shortfall from FAAC remittances.

The committee further noted that NNPC has failed to keep its commitment of N120 billion per month for value shortfall at N162 per litre for petrol.

Currently, around N250 billion, it added that the development continued to shrink remittances to the FAAC and described the deductions as “arbitrarily”.

Source: The Cable